Are You an Entrepreneur or an Inventor?

For the last 20 years, I’ve licensed my ideas. I rent them out to companies. I come up with an idea, file for protection, find a company that will benefit from my product, contact them, and if the relationship fits, if my idea fulfills the need I’ve identified, I license that idea and collect a wholesale royalty quarterly. It’s straightforward. Some licenses have lasted for a single year, and others have endured for 10. In total, I’ve licensed over 20 products.

What I love about licensing is that it’s a numbers game. No one person or one company has all the ideas – coming up with ideas is endless. No one can cap or limit my creativity. And more and more, companies are seeking to license from outside inventors.

But founding Hot Picks changed everything. I decided to see my product to market myself. I became involved in the musical accessory industry by changing the shape of the guitar pick. Our product was simple and inexpensive. It worked well, and it worked very quickly. Within weeks, guitar pick monsters and ghouls, images of goblins and vampires were strewn across my family’s kitchen table. I watched my son and daughters assemble clamshells of the picks, my idea brought to life. It was my introduction into actually selling a product – although we didn’t manufacture the picks, we packaged them. We now have two fully stocked warehouses, brimming with product and employees. I’m moving millions of picks.

I’ve learned a great deal. And I’d say that it’s been one of my best experiences. But would I do it again? I’m not sure.

The control I’ve experienced is unparalleled. When you license, you surrender a lot of control. But I have had complete control running my own business. I designed the product, named it, packaged it. I changed it when I saw fit. I’ve been a vendor, I’ve learned about finance.

But I’ve also had to take on so many different roles, many of which aren’t my passion or play to my strengths. I worked a lot of hours and undergone serous financial risk. Licensing has little financial risk – it’s essentially only gainful. There isn’t a lot of investment required. I don’t like to spend a significant amount of money until I’ve received some green lights.

And even though my product is a small guitar pick, the capital required is enormous. This small item, under 10 cents, has cost hundreds of thousands of dollars to make happen. And as you expand, it’s necessary to float even more money. You have to spend money to make money. I’ve self-financed nearly all of this project. And it’s taken its toll. I now intimately and personally know the difference between the two processes.